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« Mar 14
Chairman's Speech (Bank Of Baroda) Year : Mar '15
Dear Stakeholder,
 
 I am pleased to report that during the year 2014-15 (FY15), Bank of
 Baroda not only displayed its resilience to challenges in the Indian
 economy, but also sustained its performance in these challenging times.
 With the help of well crafted business model, the Bank crossed the 10
 trillion mark of business during the year by diversifying its
 operations across all the verticals and using technology to its
 advantage.
 
 At this point, I deem it most appropriate to review the macroeconomic
 environment, within which Bank of Baroda operated during FY15.
 
 Indian Economic Review
 
 During FY15, the Indian economy witnessed a gradual movement from
 stagflation, that is, stagnating growth and high inflation, to a phase
 of emerging green shoots of growth and sharp decline in inflation. The
 collapse of international commodity prices, in particular of crude oil
 prices, reduced political uncertainty, improved policy environment,
 increasing pace of reforms and fiscal consolidation have resulted in a
 better growth prospects for Indian economy.
 
 The cyclical upturn signaling improvements in macro-economic stability
 showed up in lower than expected inflation, and manageable current
 account deficit with stable rupee and rising foreign exchange reserves.
 The CPI (combined) inflation slipped from 8.59% in April 2014 to 5.17%
 in March 2015, wholesale price index (WPI) dipped to (-) 2.33% by March
 2015 on the back of sharp decline in fuel and food prices. Though, the
 exports and imports remained subdued due to weak domestic and global
 economies, the buoyant inflows driven by the sharp rally in stock
 market, kept the external sector stable. The current
 
 account deficit was at 1.6% in Q3 FY15 as against 2% in Q2, FY15. Also,
 foreign exchange reserves touched an all time high of US 3.0 billion
 during FY15.
 
 Further, the Union Budget focused investment driven growth by
 increasing public expenditure on infrastructure especially roads and
 railways. Though, the Government achieved fiscal deficit target of 4.1%
 set for 2014-15, it adopted a moderate path for further fiscal
 consolidation by postponing the glide path to 3% from 2 years to 3
 years. Moreover, the central government passed a number of key
 legislations relating to coal and insurance during FY15.
 
 Even so, the macroeconomic environment remained weak during FY15 with
 agriculture being affected adversely both during the kharif and rabi
 season due to deficit and unseasonal rains. The Index of Industrial
 production which saw some better growth in the first quarter of FY15,
 slumped thereafter as structural constraints led to persistent decline
 in the production of core industries such as steel, natural gas and
 fertilizers. Also, capital goods production was marked by volatility
 due to stalled investments, risk aversion and weak demand. The consumer
 goods production was also affected by lower rural incomes and
 significant deceleration in corporate sales growth. The services sector
 growth remained mixed.
 
 Amidst the weak operating economy, the deposit and credit growth of
 scheduled commercial banks remained lacklustre throughout the year. For
 banks, capital conservation and efficient utilization of capital has
 become an important challenge in view of stringent Basel -III capital
 norms, asset quality challenges and higher provisions. The asset
 quality was the major concern of the banking sector in view of subdued
 economic growth and worsened repayment capacity of the borrowers.
 
 With the sharp fall in the inflation, the RBI reduced the SLR by 150
 bps and benchmark repo rate was reduced by 50 bps during the year. The
 banks were in a position to reduce the deposit rates in the last
 quarter of the FY15.
 
 Apart from this, the banking sector participated actively in the
 Pradhan Mantri Jan Dhan Yojana, the biggest financial inclusion
 initiative of the Central Government. As of March 31,2015, the banks
 opened a record 14.7 crore accounts with a balance of Rs 15,670 crore
 in such accounts. Besides this, the banking space is set to widen with
 the introduction of newer market participants such as small banks and
 payment banks in near future.
 
 However, banks with relatively stronger systems of credit monitoring
 and cash recovery were better equipped to cope with this challenge and
 delivered a sound performance during FY15 despite challenging
 macroeconomic environment.
 
 Bank of Baroda: Sustaining Performance amidst Challenging times
 
 During FY15, despite the macro headwinds, your Bank's global
 businesses crossed the 10 trillion mark and touched Rs 10,45,625 crore
 by registering a growth of 8.25%. The domestic business grew at a
 higher rate of 8.43% in FY15 and reached Rs 7,06,148 crore. During the
 year, your Bank pursued the strategy of continuing to diversify its
 loan book in favour of retail, MSMe and agriculture credit, as
 opportunities in large-sized corporate segment had dried up. Further,
 as a part of conscious strategy, your Bank shed bulk and high cost
 deposits significantly to contain the liability costs.
 
 Your Bank's international business grew at 7.88% (y-o-y) to reach Rs
 3,39,477 crore in FY15. Healthy mobilization of domestic CASA deposits
 at the rate of 13.60% (y-o-y) and shedding of high-cost preferential
 deposits helped your Bank to improve its NIM in domestic operations at
 2.91% in FY15 as against 2.87% in FY14.
 
 Your Bank posted Operating Profit of Rs 9,915 crore (up 6.01%, y-o-y)
 supported by healthy Net Interest Income (at Rs 13,187 crore), Core
 Fees (Rs 2,200 crore), Treasury Gains (Rs 2,013 crore) and Recoveries
 from Written-Off Accounts (Rs 188.54 crore) combined with prudent
 control over Total Expenses. However, due to higher tax and non-tax
 provisions, your Bank posted Net Profit of Rs 3,398 crore (down 25.16%,
 y-o-y) during FY15.
 
 Due to continuous stress in the economy and slow recovery, the banking
 industry continued to face the challenge of maintaining asset quality
 during the year under review also.Asset Quality therefore continued to
 show increased stress during the year.  However, asset quality saw some
 improvement between the third quarter and the fourth quarter of FY15,
 wherein the Gross NPA declined from 3.85% at end-December, 2014 to
 3.72% at end-March, 2015 and Net NPA declined from 2.11% to 1.89%.  For
 the full year, the Gross NPA and Net NPA were at 3.72% and 1.89% in
 FY15 as against 2.94% and 1.52% in FY14, respectively. The Bank's
 Provision Coverage Ratio (PCR) remained at 64.99% in FY15 as against
 65.45% in FY14.
 
 Your Bank's Capital Adequacy Ratio continued to reflect its capital
 strength. The CRAR was healthy at 13.33% in terms of
 
 Basel II and 12.60% in terms of Basel III at end-March, 2015, with Tier
 1 capital ratios at 10.14% and 9.87%, respectively.  Common Equity Tier
 1 was at 9.35% as per Basel III norms.
 
 Strategic Initiatives during FY15 Corporate Credit
 
 The year FY15 was marked by low credit appetite by the corporate sector
 on account of weak investment sentiment and issues relating to
 infrastructural and other bottlenecks. Your Bank thus adopted a
 cautious approach towards corporate credit growth. As a result your
 Bank has relatively lower credit growth of 7.82%.During the year your
 Bank introduced the system of Online loan application tracking to
 facilitate knowing status of loan applications. Through this, the
 applicant would be able to track the status of his application by
 logging through 'loan tracking' link provided on your Bank's
 website.
 
 To promote Forex business and increase fee based income, your Bank
 added 3 more Authorised 'B' Category Branches to deal in
 Forex Business directly.
 
 Retail Business
 
 Your Bank strengthened its retail portfolio by placing special emphasis
 both on asset as well as on the liability side so as to increase
 customer satisfaction and also to generate synergy in its retail
 business model. On the liability side, with the formation of a special
 vertical of Deposit Resources, focus was placed on garnering higher
 share of retail term deposits while continuing to shedding the high
 cost bulk deposits. A number of initiatives were undertaken during the
 year for strengthening and reviving the relationship with existing
 customers for improving CASA deposits and promoting debit cards.
 Furthermore, some special drives were launched for activation of
 dormant accounts and funding of zero balance accounts to widen the
 active customer base.
 
 From the assets side, your Bank placed added thrust on retail business
 to make its loan-book more balanced. To achieve this, your Bank
 introduced special measures to increase the attractiveness of its
 products. Under Home Loans, new schemes were introduced such as linking
 of Home Loan Advantage scheme with SB accounts, for funding premium for
 home loan borrowers a personal loan scheme was introduced, and a
 pre-approval home loan scheme was also introduced.  Also, modifications
 and improvement to education loan schemes were also effected keeping in
 view the needs for higher education. Also, various campaigns were
 carried out to place targeted focus on retail business.
 
 Your Bank has now extensive presence of 60 RLFs in FY15 catering to the
 retail sector across the country.
 
 MSME Business
 
 To give a boost to the MSME business as well as its employment
 generating potential, your Bank undertook a number of initiatives
 during the year under review. With the purpose to effectively finance
 the micro enterprises, your Bank established Baroda Micro Enterprise
 Cell to facilitate focused attention on financing of Micro Enterprise.
 As at end March, 2015, your Bank operationalised 80 such cells. Your
 Bank introduced new schemes such as Integrated Development of leather
 sector (IDLS) scheme, promoted by Footwear Design & Development
 Institute, Baroda, self employment programme
 
 for individuals and group enterprises/SHGs (Restructured SJSRY scheme)
 and new schemes were designed for chemical and pharmaceuticals sector
 in Bharuch Region. Also, many area specific schemes were introduced
 given the demand and business potential. Apart from this, your Bank
 organized campaigns and celebrated MSME festivals to increase the
 awareness among borrowers. Moreover, to reduce the turnaround time,
 your Bank rolled out Lending Automation Processing System (LAPS) in all
 SME Loan Factories.
 
 Your Bank has a set up of 54 SME Loan Factories (SMELFs) as of March
 2015 across the country.
 
 Priority Sectors
 
 Your Bank has always focused on rural areas with its wide network of
 1,912 rural branches and 1,386 semi-urban branches as on March 31,2015.
 In order to tap emerging opportunities, your Bank undertook various
 initiatives during the year under review. With the purpose of
 increasing awareness among farmers, your Bank undertook two special
 campaigns viz., Joden Kisan and investment credit. Given the area
 specific needs, your Bank formulated tailor made schemes to address
 their unique requirements and also concessional rate of interest were
 offered to them to enhance its attractiveness.
 
 Furthermore, your Bank launched Agriculture Loan Factories for better
 customer service and improving the volume and quality of the
 agriculture advances. Three such factories are functioning in Mehsana
 in Gujarat, Bareilly in U.P and Muzaffarpur in Bihar.
 
 Your Bank strongly supported the growth and development of social
 sectors through its various outfits like Baroda Swarojgar Vikas
 Samsthan (BSVS), Baroda R-Seti Centres, Financial Literacy Centres and
 Micro Loan Factories.
 
 Financial Inclusion
 
 With the launching of Pradhan Mantri Jan Dhan Yojana (PMJDY) during
 FY15, the financial inclusion received a massive impetus wherein its
 coverage and ambit was enlarged as compared to the earlier initiatives
 and it is operating under defined timelines in a mission mode. As
 always, your Bank has been a frontrunner even in this initiative as it
 looks at it not just as a social commitment but as an effective and
 profitable business proposition. Your Bank has achieved all the targets
 set under PMJDY well ahead of its timelines. As on 31.03.2015, your
 Bank has mobilized deposits of Rs 1,101 crore in PMJDY accounts with
 average balance per account above Rs 2500.  Moreover, the share of Bank
 of Baroda in opening PMJDY account is at 5.7% of the total accounts
 opened by all banks and share in deposits mobilized is at 7.86%.
 
 Apart from this, your Bank continued its pursuit of achieving the
 targets set under disaggregated Financial Inclusion Plan (FIP) 2016.
 Your Bank surpassed the target of covering 22,030 villages as against
 the target of 16,324. Similarly, your Bank surpassed its targets for
 opening of Basic Savings Bank Deposit Account and opening of
 urban kiosk, and opening of accounts through BC mode.
 
 Given the importance of financial literacy in achieving meaningful
 financial inclusion, your Bank undertook Financial Literacy campaigns
 to educate villagers on various banking facilities and particularly,
 the benefits of savings, Aadhaar seeding, maintaining minimum balance,
 eligibility for availing
 
 Overdraft, use and safekeeping of RuPay cards, USSD facility,
 eligibility of availing accidental & life insurance, lodgment of claim
 under insurance, micro insurance products, pensions, benefits of KCC,
 GCC, prompt repayment, and availability of other retail and SME loans
 to them. Your Bank has set up a proper institutional structure for this
 purpose in the form of Baroda Sawarojgar Vikas Sansthan (Baroda RSETI).
 It is a trust formed by the Bank way back in 2003 for undertaking skill
 building activities for unemployed rural youth and providing hand
 holding support to them till their settlement in their respective
 venture. Further, there are Financial Literacy & Credit Counseling
 Centres (FLCCs) SAARTHEE that are operational across the country
 and Baroda Grameen Paramarsh Kendra that facilitate financial
 education, credit counseling, information sharing and problem solving
 on technical issues, synergy & liaison with other organizations for
 value added services and development activities in rural areas.
 
 Asset Quality
 
 Due to continuous stress in the economy and slow recovery, the banking
 industry continued to face the challenge of maintaining asset quality
 during the year under review also. Asset Quality therefore continued to
 show increased stress during the year leading to increase in gross NPA
 level to Rs 16,261 crore during FY 15 (3.72% of gross advances) from
 level of Rs 11,876 crore (2.94% of gross advances) last year.
 Similarly, total restructured advances of the Bank increased to Rs
 31,572 crore in FY 15 as against Rs 26,537 crore in FY 14.
 
 Your Bank has developed a comprehensive structure for recovery and
 credit monitoring function at the Branch, Region, Zone and Corporate
 levels. From day one of FY15, your Bank kept a close watch on potential
 stress accounts. Apart from large accounts, , your Bank laid specific
 focus on recovery of small accounts by organizing Lok Adalats and
 Recovery Camps at village/town level. Moreover special Schemes called
 Bhagirath Prayas were also launched during first half of the FY15. Your
 Bank also launched an incentive linked recovery scheme called
 Sankalp-VII, to enlist personalized attention of each and every
 staff member in pursuing recovery efforts.
 
 Customer Service
 
 Your Bank is highly responsive to the needs and satisfaction of its
 customers, and is committed to the belief that all technology,
 processes, products and skills of its people must be leveraged for
 delivering superior banking experience to its customers.  To improve
 the customer convenience further, your Bank introduced SMS alerts,
 missed call facility, comprehensive information about cheques for
 inward clearing and removal of maintenance charges on inoperative
 accounts. To get feedback on Bank's services, your Bank undertook
 online customer satisfaction survey to know about the customer's
 views / problems faced by customers and to take remedial measures.
 
 Information Technology Structure
 
 Your Bank has been using Information and Communication Technology (ICT)
 not only to improve its own internal processes but also to increase
 facilities and services for its customers.
 
 With the purpose to enhance the customer experience in alternative
 delivery channels, your Bank introduced new facilities in its internet
 Banking viz., Baroda Connect channel.
 
 The new enhanced features includes such as online e-banking
 registration, view and deposit to PPF accounts, Salary upload facility,
 Mobile OTP generation through smartphone, Tax payments of various
 States, and IMPS (Immediate Payment services), etc. Moreover, Internet
 Banking facility is made available on all Smart-phones/tablets offering
 comfort of anywhere banking to its customers. Internet Banking has been
 implemented in total 16 overseas territories viz. Tanzania, Uganda,
 Kenya, Mauritius, Seychelles, Botswana, New Zealand, UAE, Fiji, UK,
 Oman, Ghana, Australia, Trinidad & Tobago, Guyana and USA. Internet
 banking is also provided in all the RRBs sponsored by Bank.
 
 Mobile Banking - one more alternate delivery channel that offers
 various facilities to your Bank's customers was completely revamped
 by enhancing its look and feel, user-friendliness and user experience
 for technology savvy customers. The Mobile Banking platform offers many
 features and facilities to customers, viz., icon based user interface,
 balance enquiry, mini statement, fund transfer, stop payment, cheque
 status, and other services. Mobile banking application is made
 available in all i-Phones, Blackberry, Android, Windows devices.
 Through mobile banking it is facilitated to make payments for Mobile
 top- up / DTH top-up, Insurance premium payment, Online shopping,
 Over-the counter payments, fees payments to schools/colleges/
 universities, Utility Bill payments, Travel & Ticketing, Temple
 Donations, and Non internet based railway ticket booking through mobile
 phones using IMPS - IRCTC.
 
 During the year FY15, your Bank launched the first Cash Recyclers in
 the country on July 20, 2014. The unique aspect of Cash Recycler is
 that, it is enabled to accept cash as well as dispense cash apart from
 balance enquiry, mini statement and PIN change facilities. These have
 found good response from retail as well as business customers with ease
 of operation and 24x7 availability. As of end March 2015, your Bank has
 installed 390 Cash Recyclers. Moreover, your Bank installed 1,776 new
 ATMs and opened 106 NonStop e-Lobbies equipped with Five Self Service
 machines viz. Cash Recycler, ATM, Multi Function Kiosk, Passbook
 Printer and Digital Signage System for providing 24x7 routine banking
 services during the year. Your Bank also provided self service passbook
 printers to all Metro and Urban branches apart from select high
 footfall semi-urban and rural branches. In short, IT has made a visible
 difference in the functioning of your Bank and conduct of its banking
 operations.
 
 H. R. Initiatives
 
 Your Bank has adopted a very balanced people strategy to create a
 composite and responsible Human Resource in the Bank that can drive
 growth and also adequately meet the various challenges of the current
 times, viz, the large retirements, massive induction of talent, huge
 training requirements and challenges of successions.
 
 During FY15, your Bank undertook automation and centralization of
 various routine HR activities such as claims and reimbursements,
 thereby achieving faster turn around time in settling of claims.
 Further, your Bank has put in place a manpower planning tool which
 determines manpower required for different Branches / units on a
 scientific basis. The output from the manpower planning tool
 facilitates various manpower planning related decisions, that is,
 recruitment, new hire allocation, transfers and promotions. Even the
 performance management for your Bank's officer has been completely
 automated making the system more robust, objective and quicker.
 
 To enhance the Employee Engagement, your Bank undertook various
 initiatives like conduct of satisfaction surveys and workshops for
 interaction between juniors and seniors. These workshops were conducted
 to improve the employee connect with HR and top management.
 Furthermore, to reward the top performers, your Bank has performance
 linked incentive scheme for its employees.
 
 With a view to identify and groom young potential leaders, your Bank
 has implemented a well orchestrated Talent Management System that
 proactively identifies future potential leaders based on various
 criteria and also grooms them through a systematic developmental plan
 for each of the identified future leader.
 
 Against the backdrop of massive recruitments in view of large
 retirements, training and developments of new recruits has assumed
 significant importance. Further, training has now emerged as a critical
 function in the organizational endeavour to compete and keep the
 workforce fit enough to take on the competition. Your Bank has
 instituted learning systems through Baroda Academy which consists of
 series of innovations and path breaking initiatives to groom staff in
 key banking areas like credit, forex, core banking etc. apart from on
 boarding new recruits. During FY15, your Bank rolled out state of the
 art Learning Management System for e-learning courses which are
 available on the internet providing the convenience of time and place.
 Your Bank is the first Bank to launch 'Mobile Snippets' a Mobile
 App for the benefit of employees. This enables the employees to access
 daily banking news, gist of important BOB / RBI circulars, in-house
 publications, announcements for upcoming events and video messages.
 Moreover, Baroda Apex Academy has a Facebook page for informal
 learning. Further, to broad base learning, your Bank organized events
 such as motivational speeches, video shows and group activities etc
 under the name Mind Gym Series. Apart from this, your Bank also sought
 to engage in external trainings so as to widen the knowledge base of
 its employees. In recognition of the efforts towards learning
 practices, your Bank received a number of awards from prestigious
 organization such as Golden Peacock, IBA and others.
 
 Risk Management
 
 Risk is inevitable in the banking business and hence, a sound risk
 management framework is the touchstone of an efficient bank. Your Bank
 has robust architecture to address various risks inherent in its
 business viz - Credit Risk, Market Risk, Operational Risk, Liquidity
 Risk, Interest Rate Risk etc. The architecture includes mechanism of
 defining risk appetite, its monitoring, reporting and review. The
 objective of the architecture is to ensure that the asset quality is
 sustained against economic shocks and sufficient capital buffers are
 available to withstand them. The prudent risk taking culture revolves
 around continual and optimal enhancement in our systems, process,
 awareness and skill sets, so that a balance of support and control
 functions is achieved.
 
 Few of the testimonies of enhanced risk management practices are that
 the Reserve Bank of India has permitted bank for a parallel run under
 Foundation Internal Rating-based (FIRB)
 
 Approach in respect of Credit Risk. For Market Risk, your Bank has set
 up Global Mid Office in Mumbai, which facilitate cost-efficient and
 more effective way of measuring, monitoring and reporting the Market
 Risk positions in its global operations.  The systems to operationalise
 the Global Mid Office, compliant with Internal Model Approach of Basel
 II norms are in advance stage of implementation. In respect of
 Operational Risk, your bank has implemented a web based sophisticated
 Operational Risk Management solution, which is one of the best
 available solution in the industry. Similarly for Asset Liability
 Management, Fund Transfer Pricing and Profitability Analysis, Oracle
 Financial Services Analytical Application Infrastructure has been
 deployed.
 
 Your Bank has successfully implemented Basel III norms pertaining to
 capital quantity and quality, Leverage Ratio and Liquidity Coverage
 Ratio with the transition rules specified by the Reserve bank of India.
 
 Overseas Business
 
 Despite, the weakness in the global economies across advanced and
 emerging economies, the overseas business of your Bank continued to
 contribute significantly to its overall (global) business. Your
 Bank's wide-spread overseas presence provides it with significant
 risk diversification benefits across the globe. Your Bank's large
 network of branches in overseas territories and its continued thrust on
 overseas expansion helped exploit rich business opportunities even
 during FY15. As of 31st March 2015, it had operations in 24 countries
 with 104 offices. These 104 offices comprised of 60 overseas branches
 of your Bank, 43 branches of its overseas subsidiaries and one
 representative office. During the year under review, your Bank opened
 two new branches at Meru in Kenya and Mwanza in Tanzania.
 
 Key Achievements in FY15
 
 In spite of the challenging business environment, your Bank ended the
 year under review with a satisfactory set of results.
 
 - Your Bank's Global Business expanded by 8.25% (y-o-y) to Rs
 10,45,625 crore by end March 15. Within this, the Domestic Business
 expanded by 8.43% to Rs 7,06,148 crore and the Overseas Business
 increased by 7.88% to Rs 3,39,477 crore.
 
 - The Global Deposits registered a growth of 8.55% (y-o-y) to Rs
 6,17,560 crore by end March 15. Within this, the Domestic Deposits
 expanded by 9.29% to Rs 4,14,278 crore and the Overseas Deposits rose
 by 7.08% to Rs 2,03,282 crore.
 
 - Amidst aforementioned challenges, Your Bank's CASA deposits
 increased by 11.25% (y-o-y) to Rs 1,62,969 crore.
 
 - The share of Domestic CASA as on 31st March 2015 stood at 33.01% as
 against 31.76% as on end-March 2014.
 
 - The Global Advances increased by 7.82% (y-o-y) to Rs 4,28,065 crore
 by end March 15. Within this, the Domestic Advances rose by 7.24% to Rs
 2,91,870 crore and the Overseas Advances surged by 9.10% to Rs 1,36,195
 crore.
 
 - The Retail Credit of your Bank increased by 14.06% (y-o-y) to Rs
 52,488 core during FY15, of which Home Loans increased by 15.26% to Rs
 22,542 crore.
 
 - Your Bank's SME Credit portfolio increased by 9.46% (y-o-y) to Rs
 61,993 crore by end- March 2015. The Farm Credit increased by 31.55%
 and reached the level of Rs 37,403 crore and its credit to weaker
 sections increased by 9.28% to Rs 22,510 crore.
 
 - Your Bank's Operating Profit stood at Rs 9,915 crore and Net
 Profit at Rs 3,398 crore in FY15.
 
 - The Return on Average Assets (ROAA) stood at 0.49% in FY15.
 
 - Despite capital infusion by Government of India, the Return on
 Equity (ROE) was at 9.21% as at 31st March 2015.
 
 - Your Bank managed to improve its NIM at 2.91% in Domestic
 Operations and protect NIM at 2.31% in Global Operations during FY15.
 
 - Given your Bank's prudent approach, its Provision Coverage Ratio
 was at 64.99% as on 31st March 2015
 
 - relatively higher in a PSU banking segment.
 
 - Your Bank's Capital Strength gets reflected in its CRAR (Basel
 II) at 13.33% and Tier I capital at 10.14% as on 31st March 2015.
 
 - Your Bank's Cost-Income Ratio was at 43.63% for FY15.
 
 - While its Earning per Share stood at Rs 15.83, its Book Value per
 Share stood at Rs 166.83.
 
 Awards & Accolades
 
 During the year FY15, your Bank received several awards for its
 noteworthy performance across various business and financial
 parameters. The major ones were as follows.
 
 - The Bank of Baroda conferred Best Bank - Global Business
 Development (Public Sector) & Best Bank
 
 - Overall (Public Sector) Award in Dun & Bradstreet - Polaris
 Financial Technology Banking Awards 2014
 
 - Your Bank was awarded Best PSU for MSME by India SME Forum on
 11th July, 2014 at New Delhi
 
 - The Bank of Baroda awarded Skoch Order of Merit in India's Best
 2014 Financial Inclusion & Deepening Awards 2014 by Skoch Consultancy
 Services Pvt. Ltd
 
 - Your Bank Ranked 21st amongst Best Indian Brands 2014 in Brand
 Equity - The Economic Times dated 06.08.2014
 
 - The Bank of Baroda has won National Prize - First Rank in
 Innovative Training Practices for the year 2014 from Indian
 Society for Training and Development(ISTD) at Bhubaneshwar
 
 - Your Bank was conferred 'The Most Efficient Public Sector Bank'
 for the year 2014 by Dalal Street Investment Journal in the 'Best
 PSU's of India Awards' held at New Delhi.
 
 These awards and recognition are particularly valuable, as they
 acknowledge the merits of your Bank's successful business model that
 made a difference to the nation's progress.
 
 Looking Forward
 
 From the macroeconomic stability perspective, Indian economy has been
 witnessing lower inflation, lower current account deficit, robust
 foreign exchange reserves, contained fiscal deficit, momentum in
 reforms and therefore, improved growth prospects. Hence, Indian economy
 is better placed to withstand the challenges emanating from the
 possible interest rate reversal in United States and its implication on
 the domestic economy and weakening external demand.
 
 In March 2015, the IMF has raised its forecast for India for 2015 to
 7.5% from 6.3% projected earlier in response to the revision of its
 methodology for estimating GDP. Moreover, the IMF considers that Indian
 economy will be the fastest growing emerging market economy in the
 world driven by stronger investment following improvements to business
 climate.  However, it is with a broad based recovery, the banking
 industry would see better credit demand as well as improvement in asset
 quality. Further, Moody's upgraded India's sovereign rating outlook
 to 'positive' from 'stable' in April 2015.
 
 Even so, the growth in FY16 may be moderate given the uncertainties
 pertaining to monsoon as there are forecast of a less than normal
 monsoon, geopolitical risks surrounding oil prices, the uneven effects
 of currency and commodity prices and any unforeseen natural disaster.
 
 During FY15, Bank of Baroda made significant progress towards building
 a preferred bank for its stakeholders. Despite challenging environment,
 its earnings remained resilient; its fresh slippages started easing and
 its strong funding position enabled it to continue to support its
 borrowers.
 
 During FY16, Bank of Baroda will continue to focus on further
 strengthening its capital and funding position so as to grow its
 business sustainably with better profitability. Your Bank is confident
 that with its strategic focus on people, processes and technology, it
 will remain in the leadership position in the emerging business
 environment.
 
 Bank's Corporate Goals and Strategy
 
 Supported by its achievements during FY15, your Bank has chosen to
 continue its motto of Race Ahead with addition From Good to
 Great to consolidate the synergy generated last year amidst emerging
 economic and banking scenario and by transforming from being a Good
 Bank to a Great Bank.  Hence, the Bank has identified RACE AHEAD
 from Good to Great as its motto for FY16. The word RACE denotes the
 following:
 
 R for - Retail Leaning A for - Asset Quality C for - Capacity Building
 E for - Earnings Focus
 
 In FY16, your Bank would consolidate the progress made so far and would
 focus on improving profitability and profitability ratios at a much
 faster pace by leveraging its vast technological advantage and
 extensive alternate delivery channel network.  However, the movement
 from Goodness to Greatness involves considerable hard work and
 consistency in its performance in all spheres of activities to touch
 the hallowed goal of Greatness.
 
 To strengthen the approach towards Retail Leaning, your Bank will
 emphasize on aggressively canvassing low-cost current and saving
 deposits plus retail term deposits as against the high-cost bulk
 deposits. Simultaneously, the focus will be on Retail Credit, MSME and
 Agriculture credit to make the loan- book more diversified. Further,
 your Bank plans to utilize its technological advantage to its benefits
 by extensive use of alternate delivery channels such as ATMs, internet
 banking, mobile banking, usage of cards (credit, debit and gift), and
 POS machines to garner more retail business.
 
 Similar to its efforts to improve Asset Quality in FY15, your Bank will
 focus on credit appraisal including stringent KYC and documentation,
 and monitoring, NPA recovery and up- gradation in a big way and further
 arrest the fresh slippages.  Moreover, with better regulatory
 environment in terms of new bankruptcy code and commercial courts
 augurs well for maintaining better asset quality. Your Bank also plans
 to include sector specific focus to ensure better recovery, for
 instance, in case of agriculture, added focus would be laid on
 financial literacy and educating borrowers about benefits of timely
 repayment.
 
 Capacity Building is another area where your Bank has been investing
 significantly. During FY15, your Bank opened 351 new Branches,
 installed 1,776 new ATMs, opened 106 NonStop e-Lobbies and provided a
 number of Bunch Note Acceptors, Self-service Pass book Printers, Cash
 Recyclers etc. to its branches. Your Bank will accord high priority to
 generate benefits from this extensive network and efficient alternate
 delivery channels spread across the country and globe during FY16.
 
 To respond to increasing competition and other challenges, your Bank
 will make its business model more cost-efficient and try to improve its
 Earnings through an optimum mix of interest income and non-interest
 income. To achieve this, it will optimize the use of technology as the
 change agent. Your Bank will not only focus on traditional business
 unit but also non-interest income sources and fee income from various
 avenues. Your Bank will continue to focus on improving its return
 ratios.
 
 Additionally, your Bank will continue to harness its advantage of its
 wide overseas presence by widening its geographical presence as well as
 initiate measures and products so as to increase attractiveness of its
 products as also cater to diverse population across the globe.
 
 With its intrinsic strengths in the form of capital, human resources,
 technology and iconic brand, your Bank is well positioned for growth
 during FY16. In the current economic environment, your Bank will
 consolidate its positions by preserving its healthy ratios and building
 on it further to ensure buoyant growth in its profitability and return
 ratios.
 
 We are encouraged by and grateful for the ongoing support of all our
 shareholders. I solicit your continued cooperation and patronage in
 future also. ,
 
 Ranjan Dhawan
 
 Managing Director and CEO
Source : Dion Global Solutions Limited
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